Doing business in Saudi Arabia - cultural considerations for HR

The Kingdom of Saudi Arabia is the Middle East’s largest market. As the world’s largest oil exporter, Saudi Arabia also recognises the need to diversify its economy as its future cannot rely on oil revenues alone. King Abdullah is leading the way in economic reforms, with special economic zones being developed and by welcoming businesses who can contribute to the Kingdom’s more diversified financial future. King Abdullah is also a strong advocate of cautious social reform. Women in business in particular are benefiting from a much more welcome environment than ever before. Saudi Arabia remains a very conservative society, with rich but sometimes confusing traditions, even compared to its Middle East neighbours. Understanding Saudi cultural, ethical and business values as well as recent changes in the Kingdom is vital for any organisation doing business in today’s rapidly changing Saudi markets.

The Kingdom of Saudi Arabia is the largest country in the Arabian Peninsula in terms of land mass and third most populous in the Middle East after Egypt and Iraq. According to Saudi Arabia’s Central Department of Statistics and Information, the Saudi population is approximately 29.2 million as of 2013. Saudi Arabia is an absolute monarchy, with Kings chosen from amongst the sons and eventually grandsons of Saudi Arabia’s first King, Ibn Saud. Saudi Arabia is custodian of Islam’s two holiest sites, Mecca and Medina. There are 13 provinces.

Saudi Arabia’s population includes a large number of expatriates, currently estimated to be one third of the population. Most expatriates come from the Indian subcontinent, the Philippines, or elsewhere in the Arab world. Westerners are estimated at 100,000. Expatriate labour is imported for jobs that Saudi nationals are unable or unwilling to do. All Saudi nationals are Muslim. Although expatriates have many religious backgrounds, officially no other religion may be openly practiced within the Kingdom. Arabic is the official language; English is the language of many (but not all) businesses and is understood in most urban areas and amongst the well educated.

According to the IMF, Saudi Arabia’s economy is now the largest economy in the Middle East and Arab World, and is the world’s 19th largest GDP at approximately US$907 billion as of 2012. The IMF also reports a GDP growth of 8.5% in the private sector in 2011 and 7.1% overall.

Core Cultural Values

Islam

As custodian of the Two Holy Mosques in Mecca and Medina, Saudis take their religious obligations very seriously. Islam is more than a religion; it can be described as a way of life and a moral code. The majority of Saudis subscribe to a version of Islam that is interpreted much more strictly than most others. As a result, Islam directly influences both the government as well as structuring daily life throughout the Kingdom much more so than it does in neighbouring countries.

Relationships, Trust and Wasta

Saudis place a lot of importance on relationships on many levels. Religious sect, family and tribe are all important elements in determining one’s status in Saudi society. Wasta, which roughly translates as connections, networking and understanding who knows who (and in what capacity), is the main catalyst in getting things done. Do not be surprised if your Saudi-based colleagues pay a lot of attention to your job title, professional qualifications, and who you know. They may also ask you a lot of personal questions, especially about your family or your educational background and qualifications. This all helps your Saudi-based colleagues to place you within their framework of hierarchy and what they might expect from you.

Hospitality and Generosity

Hospitality and generosity are important values throughout the Middle East, including Saudi Arabia. Warm greetings, good manners, and a genuine welcome are characteristics most business visitors notice, both amongst Saudis as well as guests. Formalities are considered more than good form; they are also an obligation, recognising status and showing respect.

Important Business Values

Business Visitors and Islam

Business visitors to Saudi Arabia should be prepared to adhere to Islamic law and practices, even if they are not Muslim. Most noticeable are prayer times, when all business stops, Ramadan, where fasting is mandatory in public, and a number of social rules, from dietary and dress codes to complying with gender segregation requirements in some environments. Although these expectations can seem confusing and sometimes uncomfortable to the uninitiated, Saudis are generally very happy to explain and guide visitors so they do not offend.

Relationship Building

Expect the need to establish a good working relationship before turning to quantifiable business matters. Saudis and expatriates based in the Kingdom still prefer to do business with someone they have met face to face. It is also important to make frequent visits, which show commitment to business within the country. Try to keep your team consistent for your Saudi business; avoid sending a different person on every visit. Do not underestimate or try to rush relationship building. Develop your own wasta.

Like face cultures often associated with the Far East, Saudis will expect to be treated with politeness, dignity and in a manner that reflects their status and reputation. It is a great dishonour to treat another person with disrespect, especially guests. And you will be a guest in Saudi Arabia.

Being a Good Guest

Business visitors to Saudi Arabia are undoubtedly beneficiaries of its hospitality culture. Guests will invariably be offered something to drink along with small talk before getting down to business (unless it’s Ramadan). Being a good guest means accepting these gestures of courtesy and hospitality, even if we don’t really want another coffee but wish to talk business instead. As guests, we should also accept invitations, whenever possible, whether to a business dinner or, if we are lucky, to visit someone’s farm or to go out into the desert. Accepting these gestures is not just good form – it is also an excellent opportunity to develop business relationships and gain trust. Rejecting gestures of hospitality is bad manners and can sometimes even cause offence.

Do’s and Don’ts

Although most Saudis will overlook small political and social faux pas, visitors doing business in Saudi Arabia should be aware of the following pitfalls that could jeopardise their business relationship.

DO

Show an interest in family, but be careful not to specifically mention female members

Learn about important Islamic practices and holidays, including Ramadan, both Eids and Hajj. All will impact your ability to do business in Saudi Arabia.

Develop your repertoire of small talk. Most Saudis will have a passion for the latest gadgets, food and probably football.

Keep your feet on the floor. Never show the bottom of your feet or shoes toward another person, including crossing your legs, as this is symbolically highly insulting throughout the Arab world.

DON’T

Disrespect Islam, including behaviour expected of you as a guest.

Refuse gestures of hospitality. On the other hand, don’t admire something too much or Saudi hospitality means they will feel obligated to give it to you!

Discuss difficult political topics, especially to do with Arab uprisings and unrest in the region. Any discussions about Israel remain completely taboo.

Assume that modern/Westernised Saudis have the same values as you. Beneath the surface, traditional cultural values may prevail.

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Replies

Having spent 5 years working in Saudi there are some additional points I think may be useful to mention.

- Saudisation is the government policy of maximising the number of job positions held by local nationals through a range of integrated programs for talent management, succession planning, career development and training. HR departments should have dedicated resources responsible for this.

- Saudisation also means that local nationals must given priority consideration for any new job positions and expatriates should only be hired if there are no local nationals available who could be developed into the role. Recruitment procedures will need to be aligned accordingly.

- Saudisation targets (expressed as a % of total jobholders) are set by the government and companies can be penalised if they are not able to demonstrate an effective plan for Saudisation. Penalties can include a block on work visas which would stop any new employees or business visitors. Good program management and stakeholder engagement is essential to avoid penalties.

- Saudisation is becoming more critical to the Saudi government as it works hard to reduce the amount of unemployment within the country and companies can be inspected to see how well their Saudisation plans are being implemented. Work visas should match the employees job description or this could be highlighted in any audit.

- Saudisation strategy needs to include good relationships with the local education sector as competition for Saudi graduates will be strong. Scholarship and graduate programs, especially career planning, need to be excellent and supported with good marketing.

- Saudisation means companies need to have a clear policy in place for dealing with expatriates who are going to be replaced with local nationals. It is a good idea to incentivise expatriates somehow to support the Saudisation program and maximize any opportunities for redeployment where possible.

Finally, when shaking hands with a Saudi they tend to maintain the handshake for longer than is normal in the West but it is considered rude if you break off the handshake too soon and this takes a bit of getting used to.

They love football and this is always a safe topic to break the ice with (unless you support opposing teams... :-)